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Darktrace shares rise 43% on London IPO as buyers shake off the Deliveroo flop

A demonstration of Darktrace cybersecurity software shows how a global problem can start with just one workstation for one employee.

Michael S. Williamson | The Washington Post | Getty Images

LONDON – British cybersecurity start-up Darktrace saw its shares surge up to 43% on Friday's London debut as investors looked past Deliveroo's lackluster listing.

Darktrace priced its shares at 250p on Friday morning and valued the company at £ 1.7 billion ($ 2.4 billion).

Darktrace stock began trading conditional trades under the ticker "DARK" on Friday morning. At around 8:15 a.m. London time, Darktrace shares rose 43% to over 358 pence.

The stock fell to around 343p later that morning and is still up 37%.

Darktrace said its offer would include approximately 66 million shares – or approximately 9.6% of Darktrace's outstanding share capital – for a total of £ 165.1 million. Of this, £ 143.4m will go to the company and £ 21.7m to existing shareholders. The company has announced that it will sell an additional 9.9 million shares if demand proves higher than expected.

Deliver-who?

It's the second major test of London's appetite for high-growth tech companies. Last month, Amazon-backed grocery shipping company Deliveroo flopped on its debut, tumbling as much as 30% on one of the worst London IPOs in history.

After Brexit, the UK is reforming its listing regime to attract companies like this. A government-commissioned review calls for a relaxation of the rules for two-class share structures and SPACs (Special Purpose Acquisition Companies).

London has had a busy year so far, with technical IPOs, with Deliveroo, Trustpilot and Moonpig going public. Some investors feared that Deliveroo's disappointing performance – over 32% below its IPO price – could deter other tech firms from listing in the city.

With a market cap of £ 1.7 billion, Darktrace was conservative on its IPO, compared to the valuation of up to $ 4 billion originally hoped for.

The company's listing was followed by concerns about its close relationship with controversial UK tech entrepreneur Mike Lynch, who is fighting extradition to the US.

Lynch is accused of fraudulently increasing the value of Autonomy, the software company he founded, on Hewlett Packard for nearly $ 11 billion in 2011. Lynch denies any wrongdoing.

Lynch's Invoke Capital was an early investor in Darktrace. Poppy Gustafsson, CEO of Darktrace, and Nicole Eagan, Chief Strategy Officer, also worked at Autonomy. Darktrace says Lynch has no direct involvement in the day-to-day running of the company.

Founded in Cambridge in 2013 by a group of former intelligence experts and mathematicians, Darktrace uses artificial intelligence to detect and respond to cyber threats in a company's IT systems. According to Crunchbase, the company raised a total of $ 230.5 million from investors prior to going public.

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